When Alpha Is Set at

question 78

Multiple Choice

When alpha is set at .05 and Ho is rejected, then the probability is

• A) .95 that there was a failure to reject Ho
• B) .95 that Ho should not have been rejected
• C) .05 that Ho should have been rejected
• D) .95 that Ho should have been rejected

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Definitions:

Discounted Payback

A capital budgeting method that calculates the time required to break even from an investment based on its discounted cash flows rather than just the nominal cash flows.

Liquid Investments

Assets that can be quickly and easily converted into cash without significant loss in value, like stocks and bonds.

Payback

The period of time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Discounted Payback

A capital budgeting method that calculates the time needed to recoup the initial investment in present value terms.